Companies operating in national or global markets frequently conduct sales transactions in a number of taxing jurisdictions and/or are subject to a number of taxing authorities within the same or different jurisdictions. Such companies are required to collect many different types and percentages of sales or excise taxes, and to report their sales transactions and collected taxes to each applicable taxing jurisdiction or authority. The companies may sell different types of goods or services to different types of customers that may be taxable at different rates, non-taxable, or exempt from taxation.
For example, a company may sell goods and services in different states to customers located in different localities within such states. Each individual state or locality may have more than one level of government or governmental agencies that tax the sale of goods and services. For instance, goods sold in New York City are subject to two levels of sales taxes, i.e., a sales tax for the State of New York, and one for the City of New York. The combination of these two levels of government make up one taxing authority. A state typically has many taxing authorities, for example, a taxing authority for the State of New York and the County of Suffolk, or the City of Syracuse. The different taxing authorities may have the same or different sales tax rates. A taxing authority may even have different sales tax rates for different types of goods or services, or may define certain types of goods or services as non-taxable. Certain types of entities or transactions may be tax-exempt, such as sales to schools, churches, hospitals, or governmental agencies.
At periodic intervals, companies are required to report their sales revenues and collected taxes to the different taxing jurisdictions or authorities. A breakdown of taxable sales, non-taxable sales, and exempt sales is typically required. If a company does not have a presence, e.g., an office or legal entity, in another state, it may not be required to collect sales taxes on its out-of-state sales. Some taxing authorities may require taxes to be collected and reported regardless of where sales are made.
These different tax collection and reporting requirements can be very confusing and onerous for a company conducting business in multiple jurisdictions. Conventional accounting systems typically require the user entering sales data in the system to differentiate between the different jurisdictions in which tax collection and reporting are required, between taxable, non-taxable, and tax-exempt sales categories and types of customers, and the different tax rates that are applicable. The user typically must make manual entry of the appropriate tax codes, rates, transaction types, and taxing jurisdictions, which is very difficult and time consuming, and subject to entry errors. Such complicated manual entries may also be required for other types of multiple rate assessments on transactions, for example, assessments of royalties, customs duties, commissions, postage, insurance, etc.
It is therefore a principal object of the present invention to provide a system for tracking multiple types of rate assessments on transactions. It is a particular object that such a system be capable of automatically tracking the appropriate sales tax rates, sales types, and taxing jurisdictions for the user based upon a limited set of transaction designations. It is also desirable that such a system have the flexibility for adaptation to other types of multiple rate assessments on transactions.